Working
with vendors is a fact of life on technology projects. It makes sense to engage
vendors to work on your projects. They have product experience with many
clients and can bring best practices in addition to technical expertise.
However,
vendors are not your employees and it is wise to remember that their goals and
your company’s goals are not always completely aligned. As a result, in
addition to the benefits, there are risks in bringing on vendors to deliver
your projects.
Case study
Here’s
an example of a project gone off the rails due to issues with selecting and
managing the vendor.
The
client had issued a Request for Proposal (RFP) and selected a vendor to
implement a new application and its supporting technology platform.
The
vendor started missing deadlines early in the project. The client’s requirements
for performance were not met. To resolve the performance issues, the vendor
proposed hardware changes. The resulting procurement and installation time
caused more delay.
Unfortunately,
installation of the new hardware did not resolve the performance problems, so
the vendor embarked on a series of changes to try and improve performance. Time after time, the vendor said the
performance changes would be done by the following week, but every time they
were unable to deliver the improvements.
It was clear that the vendor’s team was working hard, including evenings
and weekends, but still the system could not operate within the necessary
timeframe.
After
months of promises followed by non-delivery, the vendor asked for a three-month
period to achieve the necessary performance. The client agreed to the
three-month timeline, but once again, the performance metrics were not
achieved.
At
this point, the vendor asked if the client would make changes to other
applications in the same business process. As long as all of the applications
fit into the overnight process, the vendor’s own application performance would
be of less concern. The client agreed to modify other applications, which
caused further delays while requirements, development, and testing took place.
Unfortunately,
the changes to the other applications were not sufficient. When done, it was
clear that the vendor would still have to significantly improve the performance
of its own product.
The
vendor continued to work at application changes and database tuning to try and
correct the performance issues. When that failed to achieve the desired
results, the client agreed to examine the business process to see if they could
change it to accommodate the product’s performance issues. The process
re-design did not create enough efficiency to solve the problem.
If
you’ve ever been in this position, either as vendor or client, you know it’s a
very unpleasant situation. The client and vendor blame each other for the
problems. Millions of dollars are spent. The business does not have their new
application. The vendor is losing money on the project. Discussions about legal
action take place.
Causes
There
were several problems with this situation.
In
the RFP, the client did not specify performance requirements. This lack of
guidance allowed the vendor to avoid considering performance when creating the
proposal.
The vendor
was a solid, well-established company, with an excellent reputation for delivery
and support. However, the product was new, with no installations in the
client’s industry or any other industry. When evaluating the vendor proposals,
the client did not recognize the importance of the fact that the references
provided by the vendor (for other products) were irrelevant to the project they
were proposing.
The
vendor’s size, stability, and reputation were a good thing, of course, in that
the vendor was motivated to deliver to the client’s satisfaction, and had the
financial resources to invest in efforts to correct the problems. A smaller, less reputable vendor may have
simply walked away early on.
As
delays continued over many months and millions were spent, the client never had
any discussion regarding whether the project should be cancelled and
alternative products evaluated. This
inability to face the failure of a product and project is common. Many clients,
once they’ve invested a lot of money, time, and resources, do not admit defeat
and start over.
Conclusion
The
interests of the client and vendor were never aligned right from the start. The
client was looking for a product to install and add value to their business
process right away.
The
vendor was looking for a successful installation of its new product, so they
could use it as a reference when selling to other clients.
If
the client had realized up front the differences in their goals, they may have
been able to negotiate an approach that worked for both. Instead, both the
client and vendor have failed to achieve their objectives.
